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Premiums on the grant or surrender of a lease

Produced by Tolley in association with of Crane Dale Tax
Corporation Tax
Guidance

Premiums on the grant or surrender of a lease

Produced by Tolley in association with of Crane Dale Tax
Corporation Tax
Guidance
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Premiums on the grant of a lease ― outline

When a property investor grants a lease, potentially this could be done on the basis that the tenant pays a premium for the initial grant of the lease, in addition to also paying rent over the term of the lease. In the absence of specific legislation to the contrary, such premiums would all be regarded for tax purposes as a capital receipt of the investor. Instead, there is specific legislation to treat some or all of such premiums as income. There are also other situations in which the legislation treats sums paid in respect of interests in property as income which would otherwise be treated as capital. This guidance gives an overview of the tax treatment of the following:

  1. •

    premiums on 'short' leases (leases with 50 years or less to run)

  2. •

    sums paid for the surrender of leases

  3. •

    mismatches between sale proceeds with price for reconveyance to the vendor, or person connected with the vendor

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Rob Durrant-Walker
Rob Durrant-Walker

Tax Director at Crane Dale Tax , Corporate Tax, OMB, Personal Tax


Rob is a cross-tax advisor with a particular focus on property tax planning, and business structure planning for OMB’s. He provides tax advice to other accounting firms, balancing commerciality, ethics, and understanding complexity. His 30+ years of experience start at the Inland Revenue in Hull. After completing his ATT and CTA by 1999 with PKF, he subsequently worked at KPMG and UHY prior to managing the business tax team as a director at Garbutt + Elliott. Rob is now Tax Director at the independent tax consultancy, Crane Dale Tax. He is a regular author for Taxation magazine with many articles and Readers Forum contributions since 2005, and he contributes as a virtual member to the CIOT Property Tax technical committee. Rob works remotely from Vancouver in Canada.

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  • 12 Apr 2024 16:01

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